World Investment Report 2014 - Investing in the SDGs: an Action Plan

The report reveals that, after the 2012 slump, global FDI returned to growth, with inflows rising 9% in 2013, to $1.45 trillion. UNCTAD projects that FDI flows could continue to rise up to $1.8 trillion in 2016, with relatively larger increases in developed countries. Fragility in some emerging markets and risks related to policy uncertainty and regional instability may negatively affect the expected upturn in FDI.

The analysis of the investment policy trends highlights that most investment policy measures remain geared towards investment promotion and liberalization. At the same time, the share of regulatory or restrictive investment policies increased, reaching 27% in 2013.

International investment rule making is characterized by diverging trends: on the one hand, disengagement from the system, partly because of developments in investment arbitration; on the other, intensifying and upscaling negotiations.

Investment incentives mostly focus on economic performance objectives, less on sustainable development. Incentives are widely used by governments as a policy instrument for attracting investment, despite persistent criticism that they are economically inefficient and lead to misallocations of public funds. To address these concerns, investment incentives schemes could be more closely aligned with the Sustainable Development Goals (SDGs).

The SDGs are intended to galvanize action worldwide through concrete targets for the 2015–2030 period. The SDGs will require a step-change in the levels of both public and private investment in all countries.

As public finances cannot meet all SDG-implied resource demands, the role of private sector investment will be indispensable, but leads to policy dilemmas and will require leadership at the global level, as well as from national policymakers to provide guiding principles to deal with policy challenges.

UNCTAD proposes a concrete Action Plan for Private Investment in the SDGs, presenting a range of policy options that respond to challenges in mobilizing funds for investment in SDGs, channeling such funds to SDG sectors, and maximizing positive impacts while managing risks.